Taxman defends informal sector tax

13 July 2018
Inland Revenue Commissioner, Justus Mwafongwe, has defended government’s decision to force informal business owners to pay tax, arguing that most people in the sector earn more than those who are formally employed.
Mwafongwe was reacting to a media enquiry from the Windhoek Observer after debate erupted on social media this week following plans by the finance ministry to tax informal businesses including hair salons, taxi or bus business, hawkers and plumbing services, among others.
“Take an example of a clerk in Shoprite or in a bank or in a certain ministry whose salary might be N$4,000 a month. But because that person is in formal employment he or she has no choice, but to pay tax since the employer will deduct from their salary,” Mwafongwe said.
He argued that some business people who own taxis and hair salons earn as much as N$20,000 per month and it is unfair for them not to pay tax when formally employed low earners pay tax.
Finance Minister, Calle Schlettwein, announced in his budget statement in March that government will search for additional streams of revenue to bring in as much as N$500 million per annum.
This includes taxing betting or gambling and taxing religious, educational and charitable organisations.
He said the ministry will develop guidelines and regulations to give effect to voluntary or forced registration of all small businesses that are currently not registered for tax purposes and to determine the rates payable by such businesses.
Mwafongwe insisted this week that the informal business sector has always been taxed.
He said what was being posted on social media was part of an education campaign as the ministry is intensifying its tax education campaign.
“We conduct an education campaign every June. What we have picked up is that people don’t have leaflets that were talking about the informal sector. People did not have information.
“This year we decided to create one for the informal sector and that is what we did.”
Mwafongwe said Inland Revenue will work with authorities like municipalities to make sure that when people apply for trading licences, they are tax compliant.
“When you implement a tax system, you must implement it across the board. Yes there is a threshold of N$60,000 per annum. Anybody who is earning less than that is not paying tax.”
On Twitter this week, Schlettwein said tax laws are generally applicable whether an entity is banked, cash based, foreign or local.
“Compliance with the tax laws must therefore be enforced equally and every entity with a tax liability should pay up.”
First Lady, Monica Geingos, also weighed in on the debate, saying that anyone earning over the tax threshold is legally obliged to pay tax.
“However, prioritising the taxation of the informal sector over considering an appropriate wealth tax makes me ask yet again: Why does Namibia, the second most unequal country in the world, not have estate/inheritance tax?” 


The Windhoek Observer is an English-language weekly newspaper, published in Namibia by Paragon Investment Holding. It is the country's oldest and largest circulating weekly.

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